State-Mediated Opportunities: Institutional Change and Social Origins of Entrepreneurship in Transitional China

Abstract

This study develops a historical-institutional account of entrepreneurship in China’s market transition by theorizing a core-periphery inversion in the state-mediated opportunity structure. We argue that as state policies evolved, entrepreneurial opportunities oscillated between the periphery and core in the stratification system, determining which social groups had better opportunities to enter entrepreneurship. Using multi-wave national survey data, we show that when private business and entrepreneurship lacked legitimacy during partial reform in the 1980s, opportunities emerged in the periphery, drawing marginalized farmers into entrepreneurship for survival; as the state privatized public assets and promoted entrepreneurship in the 1990s, opportunities shifted to the core, enabling cadres and managers to gain entrepreneurial positions through asset conversion; and after markets normalized in the 21st century, opportunities reappeared in a new periphery, pulling displaced workers into entrepreneurship in response to labor-market exclusion and status loss. This shifting opportunity structure shaped not only who entered entrepreneurship but also enduring inequality in organizational outcomes rooted in social origins. By conceptualizing and demonstrating how state-mediated opportunity structure has shifted over time, this study advances historical analysis in organization studies and entrepreneurship research, offering a dynamic theoretical framework for understanding how institutional transformations redistribute economic opportunities while reconstituting social inequality.